Lawyer Pleads Guilty In 'Operation Running Man' Insurance Scheme

JENNY WILSON, jenwilson@courant.comThe Hartford Courant

A Bridgeport lawyer pleaded guilty Friday to charges that he orchestrated a large-scale insurance fraud scheme in which he and several health professionals recruited victims of minor traffic incidents, provided them unnecessary medical services and overstated their injuries to swindle millions from automobile insurance companies.

At a hearing in federal court in Bridgeport, Joseph P. Haddad, 65, agreed to pay $1.75 million in restitution to victims of the fraud scheme, which authorities say lasted from 2006 to 2010.

Haddad's guilty plea makes him the seventh person to admit to involvement. Prosecutors previously said that co-conspirators had agreed to testify against Haddad if his case went to trial. The charges were the result of an ongoing 14-month undercover FBI Investigation that the Justice Department called "Operation Running Man."

The lawyer, who specialized in personal injury cases, solicited clients to his practice by paying "runners" to track down victims of minor automobile accidents. The use of runners to solicit clients, known as ambulance chasing, is illegal in Connecticut.

Haddad would pay the runners in cash to hide the practice. The FBI staged an automobile accident to gain access to the conspirators.

Once runners had directed clients to Haddad, he would refer them to a Stamford chiropractor and an unlicensed Fairfield doctor, who ordered treatments for the patients at Haddad's request.

Francisco R. Carbone, 53, an internist from Fairfield whose medical license was revoked in 2005, would submit claims for services he never provided to patients. He would inflate the seriousness of the patients' conditions, and would instruct a Monroe osteopath to write prescriptions for clients. James W. Marshall Jr., who also admitted to his involvement in the scheme, is said to have written over 145 prescriptions for more than 4,400 pills for accident victims he never diagnosed.

Haddad also directed his clients to Marc Kirshner, the Stamford chiropractor. Kirshner owned a chain of chiropractic offices in Connecticut called Health First and a diagnostic testing company called Midas Medical.

He admitted to performing medical services on his patients at Haddad's direction. When necessary, he would justify lengthy treatment with falsified medical records.

The patients were sent to Midas Medical for $2,000 "nerve velocity tests." Authorities say that Haddad and Kirshner instructed Carbone to refer clients to the diagnostic testing company because the procedure would likely result in a higher settlement if ordered by a doctor.

According to court documents, Haddad decided how much his co-conspirators would be paid for the medical services ordered, and sometimes paid them only a fraction of the amount he reported to insurers.

The U.S. Attorney's Office said that more than 10 insurance carriers lost up to $2.5 million as a result of the conspiracy. Haddad pleaded guilty to mail fraud and conspiracy to commit mail fraud. Prosecutors initially charged him with nine counts of fraud, mail fraud, and conspiracy.

U.S. District Judge Stefan R. Underhill scheduled Haddad's sentencing for March 28. He faces a maximum term of 20 years in prison for each charge, and a fine of up to $3.5 million, in addition to the $1,758,368 he agreed to pay in restitution under the plea agreement he reached with the government. He also faces a pending civil case Allstate Insurance Company brought against him and his co-conspirators.

Prosecutors also brought charges against Jennifer Netter, 37, of Danbury, and Jennifer Lynne, 39, of Milford, two of Kirshner's employees who received kickbacks of several hundred dollars after ordering tests for Haddad's clients. Both pleaded guilty to making false statements related to health care matters.

A Stamford chiropractor who shared an office with Carbone pleaded guilty to conspiracy to commit health care fraud. George DeCarvalho, 55, asked Carbone to create a false injury report for him to use in an insurance claim after he was in an automobile accident.

Carbone pleaded guilty to two counts of conspiring to commit mail fraud, one count of making a false statement relating to health care matters, and one count of conspiring to distribute controlled substances. Kirshner pleaded guilty to one count of conspiring to commit mail fraud. Marshall pleaded guilty to one count of conspiring to distribute controlled substances.